Freezone Company Set-up

Freezone overview:

There are around 40 Free Zones operating in the UAE, with more under construction. Each Free Zone is designed around one or more commercial categories and only offers licenses to companies within those categories.

The main attractions of establishing an entity in one of the UAE’s Free Zones is that there are no foreign ownership restrictions and companies are governed by an independent Free Zone Authority (FZA), which is responsible for issuing operating licenses and regulating the activities of companies within the Free Zone.

The UAE is now a major business hub and ideal for setting up a business or a representative office, there are now over 40 different “Free Trade Zones” in the UAE so identifying the best Free Zone through which to conduct business in the region can be a tedious task. It is also a common misconception that a Free Zone Company is an Offshore Company, however, in spite of their similarities; they do also have very differing characteristics.

In addition to enabling shareholders, directors and employees to obtain residency visas in the UAE, the benefits of a Free Zone include:

Free zone jurisdiction and license types:

The nature of the business activity that you intend to carry out will have a big influence on selecting the Free Zone to meet your requirements. The principal Free Zones and their license activities include:

Jebel Ali Free Zone (JAFZA)

Dubai Multi Commodities Centre (DMCC)

Free Zone activities:

Trading

Trading activities can be related to any import or export related transactions.

New Media

New media covers activities such as photography, web design, and broader digital media services – including the creation and management of mobile phone applications.

Film/Production/Post-Production

This category covers licenses for activities including film, art and video production, as well as post-production.

Education and Training

A wide range of activities fall under the education and training categories, but please note these are only available under packages with visa eligibility.

IT Services

IT services covers a range of activities within the information and communications technology sector, including e-commerce.

Media and Marketing Services

This category covers an array of activities including advertising, public relations, research, and much more.

Music and Entertainment

This category specifically relates to music production and recording, music promotion and management, music rights management, as well as theme parks management.

Publishing

Publishing includes activities such as publishing of directories and guides, education and consumer books, magazines, newspapers, online and electronic content, and much more. Special approval from authorities will be required.

Broadcast Management

Activities supported include radio broadcasting, TV broadcasting, and web streaming. Authority approval is required and only certain packages support this activity.

Free zone registration Requirements:

Investors can either register a new company in the form of a Free Zone Establishment (FZE) or a Free Zone Company (FZC) – an FZE has one shareholder and an FZC has two or more – or simply establish a branch of representative office of their existing or parent company based within the UAE or abroad. An FZE or FZC is a limited liability company governed by the rules and regulations of the Free Zone in which it is established. The provisions of the UAE Commercial Companies Law (CCL) do not apply.
Once a legal presence has been established in a Free Zone, the business will need to lease premises or land and acquire an operating license from the FZA. Different types of licenses apply in the different types of free zone. Companies with trade and industrial licenses can only conduct business within the Free Zone or abroad. To sell products in the UAE, a UAE official agent is required, and a joint venture needs to be formed.

Free Zone FAQs

Why set up a Free Zone Company? Would an Offshore Company be easier to set up and serve the same purpose?

A Free Zone Company is more expensive than an Offshore Company and it typically takes 4 to 6 weeks to establish. However, it is an onshore company (with some offshore characteristics). This type of company is ideal for market entry because it will give you the physical presence in the UAE through office space and visas without the need for a local sponsor. A Free Zone Company hasoffshore characteristics in the sense that all business needs to be carried out offshore/internationally or within the Free Zone itself.

As it is an onshore company, will I receive a license once the company is incorporated?

Yes, all Free Zone companies have a trade license reflective of their business activity. It is possible to obtain licenses for Trading, Manufacturing, Industrial, Consultancy and Services activities and, as mentioned above, most Free Zones specialize in a particular sector.

Can I carry out business anywhere with a Free Zone Company?

No, you can only carry out business internationally (outside the UAE) or within the Free Zone itself. You are not allowed to carry out any business on the mainland of the UAE. If your target market is mainland UAE you will need to establish a UAE onshore company with a local sponsor. Smart Ezone can also assist with this.

Are there any restrictions on business activities?

Yes. Depending on the nature of business, some external approvals may be required from certain Ministries or regulatory authorities for particular activities. For example, an investor looking to set up an educational or training practice may be required to seek approvals from the Knowledge and Human Development Authority (KHDA). If there are no external approvals required, the Free Zone Authority will carry out its own review of proposed business activity during the incorporation process.

What are the statutory requirements of a Free Zone Company?

Each Free Zone has its own governing authority so requirements vary from Free Zone to Free Zone. However, the majority follow a similar framework. There are two types of companies you can establish in the Free Zone and they are a Sole Establishment (FZE) with one shareholder and a Free Zone Company (FZC) where there are two or more shareholders. Both individual and corporate shareholders are allowed.
A manager must be appointed for the company and this person will be responsible for the day-to-day running of the company and is generally responsible for the operation of the bank account and the signing of any contracts on behalf of the company. For any changes that are made to the company structure, the manager will be required to sign off. The manager must be a UAE resident or have the intention of taking up residency.

How many residency visas will I be allocated?

That will generally depend on the type of office/premises selected. Between 2 to 3 visas will generally be allocated for a Virtual Office/Flexi-Desk option, while the size of a physical office space will dictate how many visas are allocated (generally 1 visa per 5-6sq/m).

Is it possible to obtain a Tax Residency Certificate for the Company?

It is possible to apply for a Tax Residency Certificate for a Free Zone Company and this can be extremely beneficial if the intention is to utilize the UAE’s network of double tax treaties.
Smart Ezone can assist you with the incorporation of any Free Zone, Mainland and offshore Company in the UAE. For more information on such structures, please contact us.

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At Smart Ezone, you will be facilitated with efficient company formation services. We provide full support for entrepreneurs to incorporate new business`s and firms looking to expand into new geographies.